0305 GMT - Australia-listed miners might earn less from lithium than previously envisaged in the near to medium term, says Citi analyst Kate McCutcheon, citing reduced lithium-price forecasts. Downgrading both Mineral Resources and Arcadium Lithium to neutral from buy, Citi now only has a buy on Patriot Battery Metals among ASX-listed lithium stocks, she says. Rio Tinto's recent deal to buy Arcadium gives some confidence in the long-term price outlook for lithium, says McCutcheon. But it doesn't otherwise support a higher price for rival stocks given Arcadium was the only target for a major miner interested in a large-scale, low-cost, IRA-compliant bet on lithium, she says. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0207 GMT - BHP's update on Samarco settlement negotiations provides some clarity on a key issue hanging over the stock, RBC Capital Markets analyst Kaan Peker says in a note. "As no final agreement has been reached between the parties, there could be possibility that some financial obligations may be pulled forward or deferred, which could impact the provision for Samarco," says Peker. "But given BHP still believes the provision to be 'broadly aligned,' the quantum of the impact will likely be limited, in our view." BHP is up 1.2% up at A$42.57. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0116 GMT - A disruption at BHP's Olympic Dam copper operation is unlikely to have a material impact on the miner or the market, according to Morgan Stanley analysts Rahul Anand and Shannon Sinha. While it is unclear how long mining and processing operations there will be paused, a 15-day halt would equate to about 8,000 metric tons of lost copper output, the analysts estimate in a note. That's a negligible impact for BHP, which expects to produce as much as 2.0 million tons of copper globally in fiscal 2025, and for the roughly 26-million-ton world copper market, the analysts say. They point out a similar power outage in 2016 resulted in a 15-day halt that cost BHP about US$137 million. BHP is up 1.3% at A$42.595. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0001 GMT - National Australia Bank's bull at Morgan Stanley will be watching the lender's annual result announcement for any detail on expectations for mortgage growth relative to the broader market. Analyst Richard E. Wiles is also curious about the strength of NAB's loan pipeline for small and medium-size enterprises. He tells clients in a note that he expects NAB's 4Q net interest margin to remain stable on 3Q. He believes it will meet its guidance for 5.6% annual cost growth, and would like to see a productivity target for fiscal 2025. MS has a last-published overweight rating and A$38.00 target price on the stock, which is up 1.0% at A$39.585. (stuart.condie@wsj.com)

2359 GMT - ANZ is unlikely to surprise shareholders with its final dividend in its annual results next month, Morgan Stanley analyst Richard E. Wiles writes in a note. He expects a payout of A$0.83/share, matching the half-year figure and up from A$0.81/share a year earlier. This would bring ANZ's full-year payout ratio to about 72.5% of cash profit, exceeding its target range, he notes. While there is potential valuation upside valuation from an extended share buyback, it isn't part of his base case. MS maintains an underweight rating and a target price of A$27.50 on the stock, which is up 0.5% at A$31.76. (stuart.condie@wsj.com)

2336 GMT - The share-price rise that followed Perpetual's 1Q update shows how sensitive the stock is to any small change to investors' perception of value, Bell Potter analyst Marcus Barnard says. Retaining his sum-of-parts valuation methodology, Barnard tells clients in a note that he still expects Perpetual's sale of its wealth management and corporate trust businesses to KKR to proceed for the previously agreed A$2.175 billion. That's despite units showing improved funds under management in 1Q. Barnard values Perpetual's asset-management business at 6.5 times Ebitda. Its target price falls 10% to A$24.76 but Bell Potter keeps a buy rating on the stock, which is up 1.1% at A$20.79. (stuart.condie@wsj.com)

2333 GMT - South32's 1Q result includes some positive and some negative surprises, as usual, says Citi analyst Paul McTaggart in a note. Overall, the miner had a reasonable start to FY 2025, he says. Versus Citi's expectations, manganese, copper and aluminum production is better than anticipated, with silver and zinc a miss, says McTaggart. "Disappointingly," working capital increased by roughly US$150 million, he adds. Citi has a buy rating and A$3.90/share. South32 is up 0.1% at A$3.705/share. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2332 GMT - Australian travel agent Flight Centre still shows value despite appearing to be constrained to broadly follow the global travel sector cycle, its bull at Wilsons says. Analyst Ben Wilson tells clients in a note that airfare deflation is eroding much of the benefit of Flight Centre's volume growth, while tailwinds in corporate and leisure are not leading to any outperformance of the global industry cycle. He cuts the stock's valuation multiple to 16 time earnings from 20, bringing it in line with its long-term average. This drives a 22% fall in target price, but the stock retains its overweight rating. Shares are up 1.5% at A$17.46. (stuart.condie@wsj.com)

2248 GMT - Beach Energy's additional two LNG swap cargoes in the current quarter leads Wilsons to raise its FY 2025 output forecast by 5%, moving it to the top end of the Australian company's own guidance of 19.5 million-21.5 million BOE. Still, analyst James Karakatsanis isn't confident that Beach can hold to a timeline for bringing on the Waitsia Stage 2 natural-gas project in Western Australia. "We continue to estimate startup will slip from early 2025 to April 2025 further supported by the mechanical completion and fuel gas testing target missed this quarter," Wilsons says. (david.winning@wsj.com; @dwinningWSJ)

2244 GMT - EVT Group secures a new bull at Citi on indications that the Australian entertainment group's focus could shift toward growing its hotels business and away from cinemas. Analyst Sam Teeger raises his recommendation on the stock to buy from neutral, pointing out that the company's chairman has told shareholders that he'd like to see a higher share price and dividends. Teeger tells clients in a note that there are signs that EVT could prioritize its hotels business and designate its cinemas as non-core, potentially selling the erratically performing unit. Citi lifts its target price by 12% to A$12.73. Shares are at A$10.84 ahead of the open. (stuart.condie@wsj.com)

2242 GMT - Hillgrove Resources's success with the drillbit should put the company on more investors' radars, says Wilsons. Hillgrove has nearly doubled the contained copper within its mineral resource base to some 150,000 tons. Analyst Sam Catalano notes the stock is up some 25% in six weeks. Still, he says the "broader market remains relatively unfamiliar with the rebirth of the Kanmantoo operation as an incumbent copper producer." Moreover, many investors have likely dismissed the company because of its modest previous resource base, which underpinned only four years of formal mine life, Wilsons says. It believes Hillgrove's latest announcement "is just the start of a resource upgrade cycle which should continue over coming years" and retains an overweight call on the stock.(david.winning@wsj.com; @dwinningWSJ)

2234 GMT - Macquarie speculates that Beach Energy and its joint venture partner in the Waitsia natural-gas field could pursue a deal to boost their position in Western Australia. It says that Beach and Japan's Mitsui could target Mineral Resources's energy assets in the Perth Basin to reinforce their position at Waitsia. That possibility is listed among several stock catalysts that include the start up of the Waitsia Stage 2 project, and growth in the Otway Basin of southeastern Australia. Still, Macquarie notes any deal with MinRes would likely have a negative impact on Beach's share price. It retains a neutral call on Beach's stock. (david.winning@wsj.com; @dwinningWSJ)

2218 GMT - Investors in Beach Energy can afford to sit on their hands while it navigates a tricky period of execution and likely volatility in the oil price, Citi says. Beach needs to reshape its portfolio of energy assets with acquisitions, but that's no easy task. "If oil falls in 2025 in the way we expect, then Beach Energy, which is unhedged, will have a smaller balance sheet to transact on their acquisitions," analyst James Byrne says. Citi thinks Beach will pursue a large deal to rely less on assets that the bank considers low quality. "Investors can therefore wait for execution first while getting a free look on the commodity price," the bank adds. It has a sell call on the stock.(david.winning@wsj.com; @dwinningWSJ)

2204 GMT - Jefferies thinks ARB's trading multiple has expanded too much for a company that repeatedly misses sales growth and earnings expectations. ARB's latest trading update is a case in point: 1Q sales growth of 6.5% fell short of the bank's 8.7% forecast. Still, the shares didn't fall far because ARB's management was generally upbeat about manufacturing, distribution and products. In a note, analyst John Campbell highlights that ARB is trading on a price-to-earnings multiple of 32x. "Excluding Covid, ARB hasn't traded above 30x in the last 15 years," he says. "Its pre-Covid 10-year average was 20x." Jefferies retains an underperform call on the stock, while raising its price target by 6.1% to A$35.00/share. ARB ended last week at A$42.72. (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires

October 20, 2024 23:59 ET (03:59 GMT)